Demand Prompts Singapore LNG to Increase Capacity of LNG Terminal to 6 Million Tons per Year

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Singapore LNG Corporation Pte Limited (Singapore) recently announced that the capacity of the liquefied natural gas (LNG) terminal on Jurong Island will be increased to 6 million tons per year with the addition of a third storage tank, with a 180,000 cubic-meter capacity.

The increase in capacity at the terminal, from the initially planned 3.5 million tons per year, is a result of increased domestic demand, according to the company's CEO, Neil McGregor. "The main reason for the construction of a third tank is the expected rise in Singapore's domestic demand for LNG, driven primarily by higher industrial growth," he said.

The third tank will be incorporated into the LNG terminal, which is planned to open in 2013. Earlier estimates of Singapore's demand for LNG of 1.5 million tons in 2013 have been increased to 2 million tons. The increase is largely the result of Singapore's six electricity-generating companies, which have made firm commitments to buy up to 2 million tons of regasified LNG per year to fuel the 3,600 megawatts of gas-fired power generating capacity planned or under construction.

The Ministry of Trade and Industry first announced the LNG terminal in August 2006. In September 2007, it was announced that Singapore's Energy Marketing Authority (EMA), which is a statutory board controlled by the Ministry of Trade and Industry, would call for requests for proposals for the role of LNG aggregator.

At the same time, the Ministry announced that PowerGas Limited, a subsidiary of the government-controlled Singapore Power Limited, was designated as the terminal operator and owner.

In April 2008, BG Asia Pacific Pte Limited (BG), a subsidiary of BG Group plc (LSE:BG) (Reading, England), was appointed LNG aggregator for Singapore and was awarded an exclusive contract to supply gas to Singapore until 2023, or until shipments to Singapore reach 3 million tons per year, whichever occurs first.

The same month saw the official appointment of PowerGas as the terminal developer. However, a year later in June 2009, the EMA announced the formation of Singapore LNG to take over the terminal development, citing difficulties in proceeding with the project on a commercial basis.

The installation of the third tank at the terminal and the associated increased capacity put Singapore LNG in a good position to extend gas purchases from a number of suppliers when BG's exclusive contract ends, although Neil McGregor has confirmed that Singapore LNG is not in discussions with any other companies.

Currently, Singapore takes cheaper natural gas by pipeline from both Malaysia and Indonesia, but both these countries probably will become net importers in the future, leading to higher prices. With the new terminal in operation, Singapore would then be in a good position to accept LNG shipped from countries such as Australia, Qatar and Russia as a more economic alternative.

The importance of Singapore as a future leading LNG hub in the region has been emphasized by the decision of by the international energy company ConocoPhillips (NYSE:COP) (Houston, Texas) to relocate its global LNG operations to Singapore. Gazprom (OTC:OGZPY) (Moscow, Russia) opened a Singapore office to oversee LNG operations in the region earlier this year.

View Project Report - 200000805

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.